The Insurance Australia Group Ltd (ASX: IAG) share price is down 5.2% in Friday morning trade.
The S&PASX 200 Index (ASX: XJO) insurance stock closed yesterday trading for $4.83 per share. Shares are currently changing hands for $4.58 apiece.
This comes following the company's release of this morning's Auckland flooding impact and financial update.
What's happening with the New Zealand flood claims?
The IAG share price is sinking after the company said it has received more than 15,000 claims to date across its AMI, State, NZI and partner brands related to the devastating rains and floods around Auckland.
IAG's CEO Nick Hawkins reiterated the insurer's primary focus is supporting its clients.
"We have a large team, led by our New Zealand CEO Amanda Whiting, on the ground to provide immediate support and in the longer term, to help our customers and their communities recover," he said.
As the company reported on Monday, when the IAG share price closed 3.7% lower, its reinsurance arrangements provide it with a Maximum Event Retention of $236 million. IAG expects the Auckland claims to exceed $350 million.
With second-event reinsurance covers in place, the Maximum Event Retention for a second event during the 2023 financial year is $192 million. IAG will pay an additional premium for its second drop-down cover.
IAG share price slides despite growth estimates
IAG is scheduled to release its half-year results for the six months ending 31 December on Monday, 13 February.
The company forecasts first-half gross written premium (GWP) growth of 7.5%. On an underlying basis, IAG expects 9.8% GWP growth.
Commenting on the growth outlook that's failed to lift the IAG share price today, Hawkins said:
Our strong top-line growth over the half reflects significant premium increases and new customer growth. Premium rates continue to increase in response to claims inflation and in anticipation of additional reinsurance and natural perils costs. Our retention rates have remained at very high levels.
The company forecasts a 1H23 net profit after tax (NPAT) attributable to shareholders of $468 million, up from $173 million in 1H22. It noted that this includes the benefit of the post-tax $252 million reduction in the Business Interruption provision.
The insurer expects its CET1 ratio will be 1.11, above its target range of 0.9 to 1.1.
What's ahead?
Looking ahead to the full year, IAG forecasts FY23 GWP growth of some 10%. That's up from its previous guidance of 'mid to high-single digit'.
The company said it's on track to achieve a 15% to 17% insurance margin, which could help boost the IAG share price in the months ahead.
"The strong premium growth we're delivering, along with the strength of our business and brands, provides us with confidence in the outlook and the ability to deliver our targeted 15% to 17% margin over the medium term," Hawkins said.
IAG share price snapshot
With today's intraday slide factored in, the IAG share price, pictured below, has dropped into the red in 2023, down 3.7%. Shares are up 5% over the past 12 months.
